New York: US stocks fell in early trading on Thursday as investors were skeptical that the latest European Union summit would agree on concrete measures to tackle the region’s debt crisis.
Financial shares led declines, with JPMorgan losing ground on a report that recent trading losses could reach $9 billion and Barclays stock down 12% in the aftermath of a probe into the manipulation of interbank lending rates.
EU leaders go into a meeting on Thursday more openly divided than at any time since the euro crisis began, with Germany’s Chancellor Angela Merkel showing no sign of relenting in her refusal to back other countries’ debts.
A spokesman for German finance minister Wolfgang Schaeuble said that a report that Germany could be willing to move sooner than expected to accept shared liability of euro zone debt was not true.
Spanish benchmark 10-year yields hovered near the 7% level that recently forced other highly indebted countries to seek bailouts. Markets have been worrying that Spain, the euro zone’s fourth-largest economy, will have to ask for financial help in excess of the €100 billion already approved for Madrid to bail out its banks.
Healthcare stocks will be in focus as the US Supreme Court is set to deliver its ruling on President Barack Obama’s 2010 healthcare overhaul, his signature domestic policy achievement.
Data showed the number of Americans filing new claims for unemployment benefits fell last week, but remained too high to signal any major improvement in the labor market.
“There are no surprises here. Claims are pretty much around where they were last week. This is a lackluster economy and I’m worried about what the June payroll will look like, but people are right now focused on health care and Europe,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
The Dow Jones industrial average fell 103.73 points, or 0.82%, to 12,523.28. The S&P 500 Index dropped 10.24 points, or 0.77%, to 1,321.61. The Nasdaq Composite lost 30.54 points, or 1.06%, to 2,844.78.
Shares of JPMorgan Chase & Co dropped 3.7% in the wake of a New York Times report projecting that losses from a recent botched trade could reach $9 billion in a worst-case scenario, more than four times the original estimate.
US-traded shares of British bank Barclays tumbled 12.9% a day after an investigation found it had manipulated interbank lending rates over several years, in a probe that could cost the financial industry billions of dollars.
Adding to the gloom in finance, Citi Investment Research posted a bearish note on several US banks including Bank of America Corp and Goldman Sachs as the slow economic recovery hurts trading.
The board of News Corp approved in principle splitting the $60 billion media conglomerate into separate publishing and entertainment businesses, a person familiar with the situation said. News Corp shares fell 1.5% to $21.98.